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Tax Savings Case Study

Assume you built a 40,000 square-foot manufacturing facility with construction costs totaling $2 million; and 20% of the total construction costs can be segregated into 5-year property and 10% can be segregated into 15-year property. The net present value of federal tax savings based on current federal tax law, a 10% present value factor and a 34% corporate tax rate is as follows.

Depreciation:

 With Cost SegregationWithout Cost Segregation
Year 1$337, 308$25,640

Net Present Value of Tax Savings:

Year 1$114,685
First 6 Years$149,327
40 Year Life$125,600
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